2017 (2) TMI 942 - AT - Central Excise

Refund claim - rejection on the ground that against the order of determining the annual capacity of production passed by the Commissioner, the appellant did not file any appeal - Held that - the appellant has not challenged the order of the Commissioner determining the number of chambers and the duty thereof. Unless until the order of the Commissioner is set aside or modified as per the claim of the appellant, the refund claim is not matured. In fact the appellants have not challenged the order of the Commissioner, they are not entitled for the refund - appeal dismissed - decided against appellant.

Summary

Issues:
- Determination of duty on annual capacity of production under specific rules
- Refund claim rejection based on failure to challenge initial order
- Applicability of judgment regarding chargeability of duty on galleries attached to chambers
- Entitlement for refund without challenging initial order

Analysis:
The case involves the determination of duty on the annual capacity of production for a textile fabric manufacturer under the "Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 2000." The Commissioner fixed the duty at a specific rate per chamber per month, leading to a dispute with the appellant regarding the inclusion of galleries attached to the Stenter as chambers. The appellant paid the duty under protest and later filed a refund claim for the duty attributed to the galleries. However, the refund claim was rejected by the sanctioning authority on the grounds that the appellant did not challenge the initial order determining the annual production capacity. The subsequent appeal to the Commissioner (Appeals) was also rejected, prompting the appellants to approach the Tribunal.

Despite the absence of representation from the appellant, the Revenue argued that since the initial order determining the duty was not challenged by the appellant, it had attained finality. The Revenue contended that for a refund to be considered, the order would need to be set aside or modified, which was not the case in this situation. The Tribunal carefully considered these arguments along with the records presented.

The Tribunal noted that the appellant's argument regarding the galleries not being considered for determining the annual production capacity was based on a specific judgment. However, it was highlighted that the appellant had not challenged the initial order of the Commissioner which determined the number of chambers and the duty accordingly. Referring to the judgment in Sangam Processors (Bhilwada) Ltd., it was emphasized that duty is not chargeable on galleries. Since the appellant did not challenge the Commissioner's order, the Tribunal concluded that the refund claim was premature and not entitled without setting aside or modifying the initial order.

Ultimately, the Tribunal found no fault in the lower authorities' decision to reject the refund claim, upholding the impugned order and dismissing the appeal. The judgment was pronounced in court on 19/01/2017.